Monday, January 23, 2012

Is This Common?

How often does the head of the International Monetary Fund warn of a global depression?
The global economy faces a depression-era collapse in demand if Europe doesn't quickly act to dramatically boost the size of its debt-crisis firewall, implement pro-growth policies and further integrate the euro zone, the head of the International Monetary Fund warned Monday.

"It is about avoiding a 1930s moment, in which inaction, insularity, and rigid ideology combine to cause a collapse in global demand," IMF Managing Director Christine Lagarde said in prepared remarks before the German Council of Foreign Affairs in Berlin. "A moment, ultimately, leading to a downward spiral that could engulf the entire world," she said.
Christine, unfortunately, still doesn't quite get it. There's no money out there to hand to the IMF. We'd have to print it. She's not calling for immediate and drastic privatization of government entities, either. She's still clinging to the statist model.

Oh well. Give her time.

1 comment:

Kevin said...

The problem with her remarks:

There was plenty of [government] action. Hoover, Roosevelt, and other world leaders scrambled to pour money into flailing industries.

I agree on the insularity point if she means to oppose trade barriers; but I'm afraid she refers to the idea of national currencies, as opposed to her solution of a global (or at least Europe-wide) currency that is allowed to inflate without repercussion.

And of course the only rigid ideology in post-1929 economics was that the government ought to do something about it.